The Philippine economy expanded 4.0 percent in the third quarter, its slowest pace since the COVID-19 pandemic, as household and government spending were weighed down by bad weather and a high-profile corruption probe into public works projects, the Philippine Statistics Authority reported Thursday.
The third-quarter performance brought average growth for January-September to 5.0 percent, down from 5.4 percent in the first quarter and 5.5 percent in the second.
Economic Planning Secretary Arsenio Balisacan said the weaker-than-expected GDP expansion makes it challenging for the government to reach even the lower end of its 5.5–6.5 percent growth target. “The Philippine economy continues to grow, but the third quarter performance reminds us of the urgent need to address key challenges and strengthen our foundation for rapid, sustained, and inclusive growth,” he said.
Services and industry were particularly soft, with public construction contracting sharply amid stricter project validation by the Department of Public Works and Highways during investigations of controversial flood control projects, said Balisacan. Household consumption, which makes up over 70 percent of the economy, slowed to 4.1 percent as typhoons disrupted classes, office work, and travel. “Moreover, consumer confidence may have been affected by the ongoing probes and discussions on government infrastructure spending, prompting many households to postpone purchases,” Balisacan added.
Growth was still led by services, particularly wholesale and retail trade (up 5.0 percent), financial and insurance activities (5.5 percent), and professional and business services (6.2 percent). Agriculture rose 2.8 percent, industry 0.7 percent, and overall services expanded 5.5 percent.
On the demand side, government spending grew 5.8 percent, exports climbed 7.0 percent, and imports increased 2.6 percent, while capital formation fell 2.8 percent, signaling cautious business sentiment amid tighter financial conditions and global uncertainty. Gross national income rose 5.6 percent, buoyed by a 16.9 percent jump in net primary income from the rest of the world, reflecting robust remittance inflows.
The weaker third-quarter growth may prompt the Bangko Sentral ng Pilipinas to continue easing monetary policy to boost economic activity in the coming quarters. Analysts said the economy is still positioned for moderate full-year growth, helped by resilient services, steady remittances, and improving consumer confidence. Economic managers are pinning hopes on a pickup in infrastructure spending and private investment in the fourth quarter to move growth closer to the government’s revised 5.8-percent target for 2025.
